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Dissertation Finance Topic on Bharat Petroleum Corporation, India

Project Report on Bharat Petroleum Corporation-Financial Analysis

·Bharat Petroleum Corp Ltd
(BPCL) is one of the largest public sector undertakings in India, with the
Government of India having a more than 50% shareholding in the company as of 31
March 2008.

·BPCL is engaged in the refining
and retailing of petroleum and petroleum products, with around 8,251 retail
outlets. By December 2008, around 400 of these outlets had an organised
convenience store attached, branded as In&Out, with an aggregate retailing
space of 18,600 sq m.

·BPCL’s key strategy to increase
revenues from the In&Out outlets has been to expand the basket of products
and services offered through the outlets. Apart from offering packaged food,
soft and hot drinks, cosmetics and toiletries, household care items and
consumer foodservice, BPCL has tried to add to the coverage of ancillary
services offered by the outlets over the years.

·In order to expand its range of
services, In&Out launched an e-traveller facility at its forecourt retail
outlets. The facility enables consumers to book rail, airline and bus tickets,
as well as hotel accommodation, and is available in 37 stores. BPCL is working
on Phase II of the deployment of this service, when it will make it available
in an additional 100 stores. Revenues from the e-traveller facility were around
Rs15 million in 2007/2008, its first full year of operation, with sales of
7,782 tickets.

·To provide added convenience services
to its customers close to their homes, BPCL signed a memorandum of
understanding with MoneyGram International’s agent Airwings Services, to offer
international money transfer service in India from select In&Out outlets.
The company expects to have this facility at 100 In&Out outlets by March
2009. Meanwhile, its alliance initiative with Western Union Money Transfer saw
the In&Out network record 36,677 transactions in the year ending March
2008, with a turnover of Rs699 million, an increase of 26% over the previous
year.

·BPCL’s quick service restaurant
sales through its alliance network partners – McDonald’s, Pizza Hut, Café
Coffee Day, Subway, Nirula’s and other foodservice brands – grew by 40% to
Rs249 million in the year ending March 2008.

·BPCL’s outlets on highways are
branded as Ghar Dhaba, and represent the company’s foray into food. BPCL has
developed a concept covering theme design, kitchen layout and menu planning,
and established the standard operating processes for the outlets in-house. As of
March 2008, it had 21 Ghar Dhaba outlets in operation, with total sales of Rs23
million. Developed on a large area of three to five acres (12,000-20,000 sq m),
these outlets provide the requisite space to allow BPCL to experiment with a
multiplex cinema for stop-over entertainment. If the concept is successful, the
company will roll this out in more Ghar Dhaba outlets. The multiplex screens,
especially in outlets located on highways, will also serve a social purpose for
nearby rural consumers. BPCL plans to screen social awareness, health and
literacy content in these multiplexes for rural audiences.

Private Label

·The majority of the products
through the In&Out outlets are manufactured by third parties. However, BPCL
proposes to offer its own brand of bottled water at the outlets, where the
water will be a by-product of its captive power plant, based on hydrogen fuel
cell technology.

Competitive Positioning

·Bharat Petroleum Corp Ltd
(BPCL) was the leading forecourt retailer in India in 2008, with 400 outlets.
The company added 17 outlets to the total in that year. Rather than expanding
rapidly, BPCL has focused on ensuring that its outlets are profitable, and also
on adding additional services to its existing outlets.

·In 2008, sales revenues of
BPCL’s non-fuel retail arm, Allied Retail Business (ARB), grew by 32%, to
Rs2,089 million, making it the largest non-fuel revenue generator in the oil
industry. During the year, In&Out’s sales revenues grew by 41%, to Rs1,092
million. 15 of the In&Out outlets achieved average sales of Rs1 million per
month, compared to eight in the previous year.